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“I Get by with a Little Help from My Friends”
Legal Issues Related to Corporate Collaboration, Alliances, Sponsorships, Joint
Ventures, and Licensing
Mark Scheinblum, Jacki Hartt, Tom McThenia, and Rebecca Forest
Scenario schematicYoko
Wife and heir of JohnLiverpool TechOwner of John’s patent
John
Paul Co.Licensee of John’s patent from Liverpool TechOwner of patent application on improvement on John’s composition (Linda)Owner of trade secret method of making and using (Heather)Co-owner of software?
George, Inc.Distribution networkMarketing experienceBrand
Ringo, LLCService company
S. Best Co.Former partner of PaulCo-owner of software?
Scenario schematic (patents)Yoko
Wife and heir of JohnLiverpool TechOwner of John’s patent
John
Paul Co.Licensee of John’s patent from Liverpool TechOwner of patent application on improvement on John’s composition (Linda)Owner of trade secret method of making and using (Heather)Co-owner of software?
Inventions• John’s invention patented
– Claims composition A + B
• Linda’s invention patented– Claims composition A + B + C; or– Claims composition A + C
• Heather’s invention not patented
• Paul/Best software invention not patented
Ownership of Inventions
• Absent an agreement or obligation to the contrary, inventor owns patented invention– John had employment agreement and
assigned to Liverpool Tech– Linda had no employment agreement and
refused to assign or to sign inventor declaration
Employment Agreement
• Employment agreement should spell out that rights in all inventions belong to employer
• Employment agreement should also spell royalty terms or other award to be given to inventor
What If Inventor Refuses to Sign Patent Application Papers?
• Procedure in Patent Office to petition to proceed without inventor signature
• Must prove that inventor had obligation to assign and that inventor refused to do so
When Does Inventor Have Obligation to Assign?
• When invention is within scope of employment and company has IP policy
• If invention not within scope of employment, can be tricky
• Should have had IP policy, IP agreement, or employment agreement!
Ownership of Joint Inventions
• Absent an agreement to the contrary, if joint invention, all inventors own full, undivided interest and can act independently to exploit invention
Improvements to Patented Invention
• Do they patentably define over original invention?
• Would practice of improved invention infringe original patent?
Trade Secret Protection
• Trade secrets– Protect valuable confidential information and
“know-how” that gives a business a competitive advantage
– Requires “reasonable secrecy” Can be lost by inadvertence, negligence, intentional disclosure, independent discovery, including reverse engineering
Trade Secrets• “Reasonable secrecy” measures used to protect
trade secrets include employee nondisclosure and/or non-compete agreements, physical security of buildings, equipment and computer systems, “proprietary” stamped on products and documentation containing trade secrets
• How could Paul Co. have a third party use trade secret method of manufacture?
Scenario schematic (software and patent license )
YokoWife and heir of John
Liverpool TechOwner of John’s patent
John
Paul Co.Licensee of John’s patent from Liverpool TechOwner of patent application on improvement on John’s composition (Linda)Owner of trade secret method of making and using (Heather)Co-owner of software?
S. Best Co.Former partner of PaulCo-owner of software?
Protecting Software
• Copyright protection– Arises automatically when an original work of
authorship is fixed in tangible medium of expression (17 U.S.C.)
– Idea vs. expression – low creativity– Derivative works
Protecting Software
• Copyright protection/assignment for software developed by third parties– Was there a written “work for hire” or
assignment with S. Best Co.?– Object and copyright separate (object and
source code copyright ownership can be distinct from license use rights)
Software Ownership/Licensing
• Was software developed for Paul Co. to own code or have license from S. Best Co.?
• ASP (software as a service)
• Protecting your software (patent, trade secret, copyright)
What Is the Scope of Paul Co.’s Patent License from Liverpool Tech?
• Does Paul Co. have the right to make improvements to LT’s patented invention? Who owns the improvements?
• Does Paul Co. have the right to exercise the license within a JV?
• Is Paul Co.’s manufacturing method or improved formulation allowed under the license or infringe the patent?
• Does LT have any claim to royalties from JV activities?
Scenario schematic (corporate)
Paul Co.Licensee of John’s patent from Liverpool TechOwner of patent application on improvement on John’s compositionOwner of trade secret method of making and usingCo-owner of software?
George, Inc.Distribution networkMarketing experienceBrand
Ringo, LLCService company
Issues To Consider In Entering In Alliances/Joint Ventures
• Purpose and scope of joint venture
• Initial and future contributions by partners
• Funding needs
• Regulatory Issues
• Management – rights and obligations, general and in day-to-day operations
Issues To Consider In Entering In Alliances/Joint Ventures
• Tax issues• Distributions of revenues• Ownership of, and/or rights to, joint venture
assets• Termination of joint venture• Resolution of disputes
Funding For Future Needs
• How do you address the funding needs of the JV? What if additional capital is required?
Management
• What rights does non-managing partner have with respect to JV manager’s decision making?
• Audit and inspection rights
Management
• What matters require approval of both partners?– Major contracts– Incurring debt– Approval of budgets– Hiring and firing of personnel– Change in scope of business/new product lines– Obtaining additional funding– Admitting new partners
Other Operational Issues
• What milestones apply to JV? If the JV is unable to satisfy those milestones, what is the consequence?– Loss of exclusivity– Change in management– Termination of marketing agreement– Other
Product Issues• Who sets pricing?
• Who is responsible for quality control (of product, on one hand, and of marketing materials and process, on the other)?
• How is liability addressed among the parties with respect to defective installation, defective product, etc.?
Termination
• Can either party transfer their interest to a third party?– Terms for transfer/sale
• Right of first refusal to buy out other partner
• Put and call rights
Termination
• If the JV is terminated, how is it unwound?– How are the assets of the JV distributed in
termination?– Non-competition– Rights to customers– Non circumvention
Structuring an Alliance• Alliance agreements
– Supply/distribution agreements– Technology/product license agreements– Research and development agreements– Separate new entity joint venture agreements
• Equity investments by one entity in another
• Debt investments • Combination agreements (mergers, etc.)
“The End”
– Abbey Road
Contact information• Mark Scheinblum, Attorney
– 407-418-6280; [email protected]• Dr. Jacki Hartt, Patent agent
– 407-418-6470; [email protected]• Tom McThenia, Attorney
– 407-418-6465; [email protected]• Rebecca Forest, Attorney
– 407-418-6691; [email protected]• Mailing address:
– Lowndes, Drosdick, Doster, Kantor & Reed, P.A., 215 North Eola Drive, Orlando, FL 32801